Stocks are lower and Mortgage Bonds are higher so far this morning. It’s a relatively quiet economic news days, but the week heats up Wednesday with Purchase Applications, the Fed Minutes, and a 10-year Treasury Note Auction. On Thursday, Initial Jobless Claims will be released and there will be a 30-year Treasury Bond Auction, and Friday we will receive the Producer Price Index and Consumer Sentiment.
Mortgage Bonds are trading just below overhead resistance at the 50-day Moving Average. If prices can break above this level, the next layer of resistance is 36bp higher at 104.69. The 10-year Treasury Note Yield is trading just above the important 2.70 level. We can begin the day floating, but if Stocks can turn around and improve, it will be at the expense of Bonds.